Digital assets. These are often overlooked as part of the estate planning process, yet so many of our financial planning clients have a significant amount of “digital property” and electronic communication. These ubiquitous digital assets can be quite tricky to deal with after you are gone, because unlike tangible assets which are governed by property law, digital assets are governed by the terms of the individual service agreement associated with the account when you created it.
What happens to your online accounts if you become incapacitated or after you are gone? Your Bitcoin, airline miles, PayPal, Cloud documents, pictures in iCloud, social media, banking and financial accounts may be at risk of being inaccessible, because many of these account agreements may have no provisions for what becomes of the account in these circumstances. Even if they do have provisions, how can survivors possibly know what those provisions are?
The Journal of Financial Planning covered this in a recent article on their Practice Management Blog. They estimate that the average American has 130 online accounts. That’s a staggering number of digital assets whose accessibility might be hampered if not addressed as part of the estate planning process.
Fortunately, The Revised Uniform Fiduciary Access to Digital Assets Act (UFADAA) was created in 2015 and has been enacted by many states (and other states have enacted something similar) to allow fiduciaries legal authority to manage this property, and more importantly, allows the account owner the ability to plan for the management and disposition of their digital assets. It’s the hope that the remaining states will follow suit.
As financial planners, it is a conversation worth having with our clients, to ensure that all facets of their legacy are considered. If you live in a state that has enacted this type of legislation, speak to your estate attorney about what steps you can take to ensure that your legacy includes both your tangible property and your digital assets. If you are a TWC client, ask us!